CHAPTER XI

AGRARIAN REFORM COOPERATIVES

it is one organized by marginal farmers, majority of which are agrarian reform

beneficiaries, for the purpose of developing an appropriate system of land
AGRARIAN
tenure, land development, land consolidation or land management in areas
REFORM
covered by agrarian reform.
COOPERATIVE

Landholdings like plantations, estate or haciendas acquired by the State for the benefit of
the workers in accordance with the Comprehensive Agrarian Reform Program which shall COOPERATIVE
be collectively owned by the worker- beneficiaries under a cooperative set-up. ESTATE

The government shall grant to agrarian reform cooperative preferential

treatment in the construction, maintenance and management of roads,
INFRASTRACTURE bridges, canals, wharves, ports reservoirs, irrigation system, waterworks
systems and other infrastructure with government funding. For this purpose,
the government shall provide technical assistance, facilities and equipment
to such agrarian reform cooperatives.

The government may lease public lands to any agrarian reform cooperative for a period not
exceeding 25 years, subject to renewal for another 25 years only. Provided that the LEASE OF
application for renewal shall be made 1 year before the expiration of the lease. PUBLIC LANDS
 PURPOSES OF THE AGRARIAN REFORM COOPERATIVE
To develop an
appropriate system
of land tenure, land
development, land
consolidation or
land management in
areas covered.
To provide non-formal
education, vocational/ technical
training, and livelihood
programs to beneficiaries and
marginal farmers.
To act as conduits for external
assistance and services to the
beneficiaries and marginal
farmers
To coordinate and facilitate the To provide financial
dissemination of scientific facilities to
methods of production and provide beneficiaries for
assistance in the storage, transport provident or
and marketing of farm products for productive purposes
agrarian reform beneficiaries and
at reasonable cost
their intermediate family
To provide social security benefit,
health, medical and social insurance To arrange and facilitate
benefits and other social and the expeditious transfer
economic benefit that promote the of appropriate and
general welfare of the agrarian suitable technology to
reform beneficiaries and marginal beneficiaries and
farmers managerial farmers at
lowest possible costs
To undertake a comprehensive
and integrated development
program in agrarian reform and To represent the beneficiaries
resettlement areas with special on any or all matters that affect
concern for the development of their interest.
agro-based, marine-based and
cottage-based industries.
To undertake such other
economic or social activities as
may be necessary or incidental
in the pursuit of the foregoing
purposes.
 PRIVILEGES OF THE AGRARIAN REFORM COOPERATIVE

Supply and distribution of consumer, agricultural, acqua-cultural, and industrial goods,

production inputs and raw materials and supplies, machinery, equipment, facilities and other
services and requirement of the beneficiaries and marginal farmers at reasonable price

Marketing of the products and services of the beneficiaries in local and foreign markets

Processing of the members’ product into finished consumer or industrial goods for domestic
consumption or for export.

Provision of essential public services at cost such as power, irrigation, potable water,
passenger and/or cargo transportation by land or sea, communication services and public
health and medical care services.

Management, conservation and commercial development of marine, forestry, mineral, water

and other natural resources subject to compliance with the laws and regulation on
environmental and ecological controls

Provision of financial, technological and other services and facilities required by the
beneficiaries in their daily lives and livelihood
 CHAPTER XII
COOPERATIVE BANKS

ORGANIZATION, MEMBERSHIP AND ESTABLISHMENT OF A COOPERATIVE BANK

COOPERATIVE ORGANIZATION
 It must be duly established and registered under the code
 It should be under the provision of the code subject to the requirement and requisite authorization from
the BSP.
 One cooperative bank per province
 An additional cooperative bank may be established in the same province depending on the economic
condition and needs of public as determined by BSP

MEMBERSHIP IN COOPERATIVE
 It can be regular or associate member
 Regular member shall be limited to cooperative organization which are holders of a common shares of
the bank
 Associate member is those subscribing and holding preferred shares of the bank which may include but
are not limited to the ff:
 Individual member of the bank’s member -primary cooperative
 Samahan ng Nayon and Municipal Katipunan ng mga Samahang Nayon (MKSN) that
held common share of cooperative bank. They shall notify the cooperative bank
concerned of their intention to convert within a period of 90 days from the effectivity of
the act.
 MKSN are given a period of 1year from the effectivity of this act to complete their
conversion.
 Failure of the MKSN to convert to a full-pledge cooperative within maximum period if
1 year, it is concerned to be converted to a common share held by such association to
preference shares.

ARTICLES OF COOPERATION AND BYLAWS

 Shall be registered with the authority only when accompanied by a certificate of authority
 It should be issued by the BSP
 It should be under its official seal

ADMINISTRATON OF COOPERATIVE BANK

 BSP shall prescribe he fit and proper qualification of bank directors and officers
 The number, composition and term of the directors shall be defined in the articles of cooperation and
bylaws of the cooperative bank
QUORUM AND VOTING RIGHTS
 In general assembly meetings, whether regular or special meeting shall be ½ plus 1 of the number of voting
shares of all the members in good standing.
 In board of directors, whether regular or special meeting shall be ½ plus 1 of all the member of the board of
directors
 Each director shall only have one vote
 The quorum requirement for amendment of articles of cooperation and bylaws shall be ¾ vote of all the
member with voting rights, present and constituting a quorum
 Other requirements shall be prescribed by BSP
 The voting rights of a member shall be proportionate to the number of paid-up shares

POWER, FUNCTION AND ALLIED UNDERTAKING OF COOPERATIVE BANK

 Shall provide primarily into financial, banking and credit services to cooperative organization and their
members.
 BSP may prescribe appropriate guidelines, ceilings and condition on borrowings
 The power and function of a cooperative bank shall be subject to such rules and regulation as may be
promulgated by the BSP

CAPITAL REQUIREMENT OF COOPERATIVE BANK

1. A Cooperative bank shall have a minimum paid-up capital in such amount as may be required by the BSP.BSP
can provide the rules and regulation, including the terms thereof and rights appurtenant thereto to determine
compliance with laws and regulation governing capital and equity structure banks. It should be provided that
coop banks shall issue par values shares only.

2. The Barrio Savings Fund (BSF) and Barrio Guarantee Fund (BGF) collected /deducted by various banks
throughout the country from the loan proceeds of farmer-borrower who were members of cooperatives and
MKSN in compliance with the presidential decree no.175 and accompanying letter of instruction, which are
still floating and outstanding either as active or dormant deposit accounts in the books of those accounts .
shall be deposited to the cooperative bank in the province.

CHAPTER XIII
INSURANCE COOPERATIVE

TYPES OF INSURANCE
 Shall provide its constituting members different types of insurance coverage
 It should not be limited to life insurance with special group coverage, loan protection, retirement plans,
endowment with health and accident coverage and etc.

APPLICABILITY OF INSURANCE LAW

 Requirement for capitalization, investment and reserves of insurance firm must be liberally modified upon
consultation by the authority and coop sector
 Requirement can be reduced to half
 CHAPTER XIV
PUBLIC SERVICE COOPERATIVE

Power
Generation,
Transmission
or Distributor

Public
Markets, Ice Plants and
Slaughter cold Storage
Houses
PUBLIC
SERVICE
COOPERATIVE

Land and Sea

transporation Communication
cooperative Services including
for passenger telephone and
and cargo telegraph

REGISTRATION
REQUIREMENT

- may be imposed by other

articles of cooperation and
bylaws provide for the
membership of the users and
producers of such cooperative
gov't agencies
- if there are 2 or more
applicants, preference shall
be given to public service
cooperative
REGULATION OF PUBLIC SERVICE COOPERATIVE
1. The internal affairs of public service cooperative shall be governed by the code
2. All matter relating to the franchise or certificate of public convenience and necessity of cooperatives shall be
governed by the proper government agency concerned
3. The authority and the proper government agency concerned shall jointly issue the necessary rules and
regulation to implement the Public Cooperative Service
4. The authority shall establish a committee for the monitoring of transportation services cooperative that is
composed with representatives of Authority, LTFRB and LTO
5. A local monitoring committee shall likewise be established at the extension office of the Authority to
facilitate the monitoring of transportation cooperatives

Importation,
distribution and
marketing of
petroleum
products

Marketing of Operation of
ENGAGEMENT IN
vehicle/drivers ALLIED BUSINESS BY gasoline stations
insurance TRANSPORTATION and
policies COOPERATIVES transportation
service centers

Importation,
distribution and
marketing of
spare parts and
supplies
 CHAPTER XV
CREDIT COOPERATIVE

OBJECTIVES OF CREDIT COOPERATIVE

 To encourage savings among its members
 To create a pool of such savings for which loans for productive or provident purposes may be granted to its
members
 To provide related services to enable its members to maximize the benefit from such loans

Interlending
of surplus
fund

Mutual
Representation
Benefit

Research and ORGANIZATIONAL Deposit

Development LINKAGE Guarantee

Professional
and
Bonding
Technical
Assistance

Education
and Training
 CHAPTER XVI
FINANCIAL SERVICE COOPERATIVE

FINANCIAL SERVICE COOPERATIVE

It is a financial organization owned and operated by its members and authorized to provide the following
service, exclusively to its members:
1. The function of credit cooperatives and other cooperatives, including multipurpose cooperatives that provide
savings and credit to their members
2. Other financial services subject to regulation by the BSP

MEMBERSHIP AND
AFFILIATION

ASSOCIATE MEMBER who

REGULAR MEMBER who
are natural person
are natural person but who do
not immediately qualify under
the requirements for
membership set out in the
bylaws of the cooperative

REGULATION AND SUPERVISION

 Issue rules and regulation for the safe and sound conduct of operation
 Establish standards of operation for uniform application
 Investigate to determine whether a financial service cooperative is conducting its business in a safe and sound
manner
 Conduct regular examination of the books of account, records and other documents
 Prescribed appropriate fees for supervision and examination of financial service cooperatives among others
 Pass upon and review the qualification and disqualification of officers and directors
 Disqualify and suspend those directors who omits acts that render him to be unfit to the position
 Require the submission of relevant reports from the deputized supervisor
 Provide remedial measure in operations of financial service cooperatives

FINANCIAL SERVICE COOPERATIVE FUNCTION

 Develop standards and provide services for the benefit of its affiliates and their members in accordance with the
rules and regulation of the authority
 Define common objectives and coordinate activities
 Establish and administer funds
 Establish a savings guarantee system for the protection of their affiliates’ member-depositor within 3yrs from
approval of code
 Exercise on-site and off-site supervisory power over its members
 Provide remedial assistance to its members concerning their operation and management
 Transmit relevant and required information regarding the operations and performance of member-cooperatives
to the authority.
QUALIFICATION OF A DEPUTIZED FEDERATION
 Registration and operating as a Federation with direct access to the financial information and records of its
member-cooperative
 Net Worth of at least Php 10 000 000
 Active membership at least 10 primary cooperatives\ undertaking savings and credit operation that are subject to
supervision and examination
 Positive net worth for the last 2 yrs.
 Have at least 3 qualified examiners
 No adverse findings or derogatory record from any government regulatory agency or entity and creditors
 Willingness to undergo training and examination and supervision to be conducted by the CDA

FUNCTION OF DELEGATED SUPERVISOR AND EXAMINER

 Monitoring strict compliance by the cooperative on various legal, regulatory and other governmental
requirement
 Evaluation of the cooperative governance, internal control, management of risks and other prudential practices
 Evaluation of the overall financial condition of the cooperative through on-site and off-site supervision
examination
 Assessment of compliance with sound policies, procedures and practice

Conduct supervisory and

Once aproved a certificate of
Authority wil be issued to the
federation and a Term of
References detailingt the
responsibilities and
accountabilities of the deputized
federation shall br executed
examination of member-
cooperatives
Be under the administrative
control of federation but directly
accountable to the Cooperative
Development Authority for the
conduct of supervision and
examination of member

Within 6 months from the Submit within 30 calendar days

issuance of the certificate after the end of each engagement
of authority the deputized complete examination report and
federation has set-up the findings directly to the CDA
CONDITION independent supervisory
FOR and examination unit
DEPUTIZED
FEDERATION Use the CDA's Supervsion and
Examination Manual in the
examination of cooperatives

Within 1 month from the

issuance of the Certificate Keep the SEM for official and
of Authority , the exclusive use of the supervisors
deputized federation shall and examiners
submit the list of
recommended personnel
including their biodata, for Treat all reports and information
independent supervisor gathered during its supervision and
and examination unit examination procedures with the
strictest confidentiality
 CANCELLATION AND REVOCATION OF THE CERTIFICATE OF AUTHORITY

The CDA may cancel the

certificate of Authority if
there is a violation of any of
the provision of the term of
reference

The CDA may cancel the certificate of

Authority if there is a violation of any
of the provision of the Cooperative
Code and other relevant laws, rules
and regulation

Failure or Delay in the

submission of required Breach of Confidentiality
reports

Misrepresentation or non-
disclosure of material
information to the CDA
Negligence and/or
inefficiencies in the conduct
of its supervisory functions

Failure to secure CGS on

annual basis

Such other reasonable factors as

may be determined by the CDA
 CHAPTER XVII
ELECTRIC COOPERATIVE

SECTION 4 - PURPOSE
The primary purpose of the guidelines is to facilitate the proper conduct of referendum among Electric
Cooperative registered with the National Electrification Administration (NEA) as amended, which opt to register with
CDA as provided.

SECTION 5 – PROCEDURES
A. Referendum Initiated By The Board Of Directors
1. Issue notice of Referendum 30 days before the conduct of the referendum indicating:
 Date of Referendum
 Mode of Conduct of Referendum which may be either be:
a) Survey form
b) Assembly meeting in the respective districts which maybe simultaneous or sequential
2. Posting/ Publication of Notice to referendum shall be done not later than 30 days prior to the scheduled conduct of
referendum
3. Identification of members in good standing based on the qualification and disqualification as provided in the bylaws
4. Provision of Referendum questionnaire form to qualified members to vote whether to register or not to register with
the authority within 15 days prior to the date of referendum
5. Submission of the Accomplished questionnaire forms shall be on the day of the referendum but shall not be later
than 5’o clock in the afternoon and canvassing votes by Cooperative Election Committee shall immediately follow
thereafter
6. Certification by the Election Committee as to the result of the referendum duly noted by the majority of the board of
directors

B. Referendum Initiated By The Member-Consumer

In case the BOD refuses to conduct a referendum, the member-consumer may initiate it through a petition duly
signed by at least 300 member-consumer of each district of the Cooperative who are entitled to vote by filing the
same to the BOD. The BOD shall act on it within 30 days from receipt thereof whether to grant or deny the petition.

SECTION 6 – VOTING SYSTEM

 Each member-consumer shall only have 1 vote.
 The voting shall be done through secret balloting
 Proxy shall not be allowed
SECTION 7 – PERCENTAGE OF VOTES REQUIRED
The required number of votes for the registration with the Authority shall be 20% of all the member-consumer
in good standing

SECTION 8 – POST REFERENDUM ACTIVITIES

A. Submission of The Requirements for Registration
All requirements and supporting document including the result if the referendum shall be submitted in 4 copies
to the nearest CDA Extension Office for preliminary evaluation and issuance of the certificate of registration.

B. Amendments of Articles of Cooperation and Bylaws

Newly registered Electric Cooperative are required to amend their articles of cooperation and bylaws within 1
year from the date of registration in order to conform and adopt with the code

Copy of the board resolution

certifying to the result of the
vote approved through a
referendum approving new
registration of the cooperative
with the Authority in
compliance with Article 128
Certified copy of the
Bonds of articles of
accountable incorporation/cooperatio
officers n and bylaws as required
by the Authority

DOCUMENTS
TO BE
SUBMITTED
FOR
REGISTRATION
WITH THE
Within six (6) months AUTHORITY
from the registration, the
treasurer shall submit a
sworn statement of the Duly audited
authorized share capital, financial
the subscribed share statements for the
capital of members and past two (2) years
the amount of paid-up
share capital received by List of names of
the treasurer incumbent board of
directors and their
addresses certified
by the board
secretary and
attested by the
chairperson
 EFFECTS OF REGISTRATION WITH THE AUTHORITY

Upon the effectivity of this Code, electric cooperatives that are duly registered with the Authority, and issued a
certificate of registration, shall no longer be covered by Presidential Decree No. 269, as amended by Presidential Decree
No. 1645: Provided, That electric cooperatives registered with the Authority shall now be covered by the provisions of
this Code as well as future rules and issuances of the Authority: Provided, however, That the security of tenure and the
collective bargaining agreement between the cooperative management and its employees shall be respected, with no
diminution of their existing salaries, emoluments, ranks and other benefits

The electric cooperatives registered with the Authority with existing loans obtained from NEA after June 26, 2001 shall
continue to observe the terms of such loans until full payment or settlement thereof

Except as provided in the immediately preceding paragraph, the NEA shall no longer exercise regulatory or supervisory
powers on electric cooperatives duly registered with the Authority

Electric cooperatives registered with the Authority are entitled to congressional allocations, grants, subsidies and other
financial assistance for rural electrification which can be coursed through the Department of Energy, the Authority
and/or local government units. The electric cooperatives registered under this code can avail of the financial services
and technical assistance provided by the government financial institutions and technical development agencies on terms
respecting their independence as autonomous cooperatives

All condoned loans, subsidies, grants and other assistance shall form part of the donated capital and funds of the electric
cooperatives and as such, it shall not be sold, traded nor be divided into shareholdings at any time; these donated
capital/fund shall be valuated for the sole purpose of determining the equity participation of the members. Provided,
that in the case of dissolution of the c0operative, said donated capital shall be subject to escheat

Electric cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act
No.6939 are hereby deemed registered under this Code
 The par value
of each share
which shall not
The number of be more than
shares fully The total value
one thousand of such shares
paid-up by the pesos (Php
member contributed by
1,000.00) the member
The name and The date of
addresS of the
such share
member to whom
such certificate capital
was issued certificate

The printed names

The name and
and signatures of
address of the
chairman and the
cooperative
secretary the electric
issuing such
cooperative issuing
certificate
such certificate

The serial Contents of

Share The seal of the
number of the
cooperative, if
share capital Capital any
certificate Certificate

FACTORS TO BE
CONSIDERED IN THE
DISTRIBUTION OF
SHARE CAPITAL
CERTIFICATE

The previous equity

The amortization Other capital
contributions made Payments made Capital build-up
component contributions
by the member